Bangkok--3 Dec--Standard & Poor's
Continued spread compression in the high-yield segment in November has enabled a strong follow-up to October's robust issuance figures, said an article published today by Standard & Poor's. Speculative-grade issuance in the U.S. totals 285 issues worth $118 billion so far this year (through Nov. 30, 2009).
This eclipses the 105 issues worth $40 billion in all of 2008 and approaches the record-high 298 issues worth $136 billion in all of 2007, according to the article, titled "U.S. High-Yield Metrics Show Continued Improvement, But Issuers Are Still Susceptible To Downgrade Risk (Premium)."
"However, with a current U.S. speculative-grade default rate of 11.1%, the high-yield market is certainly not without risks," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "Despite marked improvements in downgrade activity, negative bias, and spreads, all metrics remain elevated after having reached record highs earlier this year." (The U.S. speculative-grade default rate is a preliminary estimate from Nov. 30, 2008-Nov. 30, 2009.)
The negative bias for the U.S. speculative-grade universe dipped marginally to 34.3% in November 2009 after hovering over 40% since the beginning of 2009. After declining consistently since August 2008, positive bias is slowly increasing toward levels seen a year ago. Positive bias in November 2009 rose to 9.7% from 8.9% in October.
In addition, continuing the trend observed since the start of 2009, spreads contracted across all sectors through November. Spreads are currently coming in at the lowest levels seen in all of 2009.
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Media Contact:
Mimi Barker, New York (1) 212-438-5054,
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Analyst Contact:
Diane Vazza, New York (1) 212-438-2760